After my Latin American adventures last year I felt like Mexico City is just too big a city and I needed to come back and dig a little deeper into the entrepreneurial ecosystem before I head off to Spain (and maybe some other parts of Europe). My first interview back in D.F. was with Beto Marquez, the Marketing and Project Manager for NextLab Ventures Group.

Now that I’ve had time to explore a large chunk of the rest of Latin America (Mexico was my first stop on the Startup Nomad tour), I have a bit of a broader perspective on Mexico and its ecosystem, so it was interesting to come back to where I started with a more mature view of the overall Latin American ecosystem and Mexico’s place within it.

According to Beto,

“Mexico is seen like this country that is more Americanized than Latin Americanized…we’ve been kind of segregated from all of the activity and all of the agreements that they make. We’re not really a part of it.”

This is partly because of Mexico’s physical proximity to the U.S. and partly because of its sheer size. With a population of roughly 121 million and a GDP of just under 1.2 trillion USD (the next largest Spanish-speaking Latin American country has fewer than 50 million people), Mexico’s in a bit of a different position than it’s much smaller Latin American neighbors. That could explain why, despite its separation, it’s been attracting foreign entrepreneurs who want to set up their companies and lives in Mexico City.

“[The entrepreneurial ecosystem] is a really nice mix of Mexicans and foreigners,” Beto said, “but not as many from the United States.”

While Mexico has a large enough market to sustain major business growth, however, there are still a number of issues holding back its entrepreneurial ecosystem, one of which being a lack of a mature investment ecosystem.

“The exits here are much more difficult than in the US,” Beto told me.

“Going for an IPO is not really a likely exit option here, so it’s not attractive for investors to take risks on startups here. What I have seen is a VC invests and then a bigger VC buys out the first VC but, eventually, the biggest VC firm has to IPO the company and that’s where it gets it’s return. But here that cycle gets cut off because there isn’t a proper way to make a company public” and so investors have reduced potential for successful exits.

Because of that, Beto believes that,

“the biggest challenge [to the ecosystem] is the investor part.” He continued to say that, “we [Mexico] have some firms but we are really green. We are not even close to being mature yet.”

At the same time that the economic factors hold back the growth of Mexico’s entrepreneurial ecosystem, there are also cultural factors in play that make it more difficult for the startup scene to develop. “There are two issues that I’ve seen that I really struggle with in young people,” Beto said. “The first one is that, I don’t know why, but they are somewhat apathetic. You have to really push this entrepreneurial view of life…The other one is our culture. This is a country that has suffered a lot of macro-economic devaluations …and our parents have this way of seeing things that you have to work, you have to make money as fast as possible, and, most of all, not to take risks and not to take loans. So most young people still have this way of seeing things from their parents…

…We are not raised to take risks, just to get a job and ‘yeah, that’s life, deal with it.'”

Beto believes that mentality is slowly changing, however.

“A lot of people more and more are trying to get out of this square way of thinking and be more entrepreneurial,” he said. “It’s definitely a trend here.”

Startup Nomad will have to come back to Mexico in a few years to see how the ecosystem has developed.

What’s your take on what Beto had to say about Mexico’s entrepreneurial ecosystem? Do you agree that both cultural and economic factors are holding it back? Please weigh in in the comments section below.

Also, please let me know where I should go and whom I should interview next. Let me know below 🙂